Stocks to climb on China rate cut

NEW YORK (CNNMoney) -- A surprise rate cut by China's central bank and a successful bond auction by Spain cheered investors around the globe Thursday and had U.S. stocks poised to build on the previous day's rally.

Investors are also looking ahead to Federal Reserve Chairman Ben Bernanke's congressional testimony, and showed little reaction to a jobless claims report that was close to expectations.

Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures were moved sharply higher following the 7 a.m. ET announcement from the People's Bank of China. Stock futures indicate the possible direction of the markets when they open at 9:30 a.m. ET.

China's central bank cut its range of lending and deposit rates by a quarter percentage point in an effort to address the slowdown in the nation's manufacturing sector. Its key 1-year lending rate fell to 6.31%.

While there had been growing hopes for action by the Chinese government to stimulate the economy, the timing of Thursday's announcement was a surprise.

Meanwhile, the Spanish government held a bond auction that was an important test of its ability to raise money from investors, two days after its treasury minister warned the country was at risk of being shut out of financial markets.

Demand was more than three times the €611 million worth of 10-year bonds that Spain offered, up from a bid-to-offer ratio of 2.42 in April. But the interest rate Spain had to pay to sell the debt rose to 6.044% from 5.743% in April.

The yield for Spain's 10-year debt edged slightly lower to 6.16% in trading following the auction.

Spanish bond yields have been rising recently as investors demand an increasingly high risk premium to lend money to the government. Fears are growing that the country will need to be bailed out if it can't come up with a way to re capitalize its banking sector, which some estimates put at a cost of up to €100 billion.

Back in the United States., Bernanke will testify on the economy before the Joint Economic Committee of Congress at 10 a.m. ET. Observers will look for clues as to whether the Fed might extend its Operation Twist program or, in a move that would be even more drastic, launch a third round of asset purchases known as quantitative easing.

Economy: First-time claims for unemployment insurance totaled 377,000 in the week ended June 2, the Labor Department said. That's 2,000 more than the consensus forecast, but was down 12,000 from the prior week.

Shares of Nasdaq OX Group (NDAQ) fell in 1.2% in after-hours trading on Wednesday. The exchange operator announced its plans to spend $40 million to compensate trading firms for losses caused by glitches that delayed Face book's (FB) debut. Later in the day, Nasdaq CEO Bob Reified apologized for the problems but said affected investors should talk to their brokers.